A new generation of investors calls for user-friendly, customised investment solutions, and digital investing solutions are emerging to answer this demand. Existing investors, familiar with digital solutions as a result of their use of computers, tablets and mobile phones, expect new tools that guide them in their investment decisions.

The bar for user experience and service access has been raised. Beyond the evolution of customer needs, the industry faces several challenges. Asset managers are under significant margin pressure as the level of fees has been decreasing while costs have remained stable or even increased. Fund operations are often still carried out on legacy systems and are costly and lengthy: intensive reconciliation efforts and manual tasks are required and it is difficult to integrate digital front-ends.

In addition, new regulations are increasing the cost of compliance. Some, like MiFID II, are real gamechangers for the industry and have led to impactful strategic choices for asset managers on how to sell their investment funds. Digitisation promises to help firms reduce operational costs and develop leaner and more efficient processes that will ensure profitability within an environment of more competition and fee pressure.

The Luxembourg fund industry is well advised to continue its transformation into a digital fund hub, and to offer a modern digital infrastructure for end investors, both retail and institutional. Asset servicers should consider “coopetition” – working together to mutualise commodity services in a market infrastructure to gain efficiency and reduce cost.